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EPS – Franco

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › EPS – Franco

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • May 11, 2021 at 11:40 am #620296
    rose6772
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Hello, I’m not getting the answer for the following question:

    The financial statements of Franco group showed that retained earnings had increased in the year by $689,424. The following items were presented by Franco in either the statement of profit or loss for the year or in the statement of changes in equity:

    Interest – 84,441
    Taxation – 227,553
    Non-controlling interest – 47,338
    Ordinary dividend (10 cents per share) – 65,000

    What figure should be reported in the financial statements for basic earnings per share, to the nearest cent?

    The answer says its 116 cents but I’m getting 50.78 cents

    My workings:

    PBT 689424 Ordinary shares 65000
    Less: Interest 84441 Rate 0.1
    Less: Taxation 227553 No. of shares (65000/0.10) 650000
    Less: NCI 47338
    Profit 330092

    EPS (330092/650000)*100 = 50.78

    Where did I go wrong?

    May 11, 2021 at 11:44 am #620297
    rose6772
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Sorry, the workings seem to have been jumbled up!

    PBT 689424
    Less: Interest 84441
    Less: Taxation 227553
    Less: NCI 47338
    Profit 330092

    Ordinary shares 65000
    Rate 0.1
    No. of shares (65000/0.10) 650000

    EPS (330092/650000)*100 = 50.78

    May 12, 2021 at 7:04 pm #620433
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6473
    • ☆☆☆☆☆

    Hi,

    The figure of 689,424 is not the PBT figure as you state but is the increase in retained earnings for the year. You need to work back from this to get the profit for the year. Give it a go and see how you get on.

    Thanks

    May 13, 2021 at 6:46 am #620466
    rose6772
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Sorry sir, I don’t understand. How do I work back from it?

    May 17, 2021 at 7:29 pm #620861
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6473
    • ☆☆☆☆☆

    Hi,

    The movement in retained earning is made up of the profit for the year less any dividends declared. So you need to adjust the movement for the dividends figure given in the question and that will give you the profit for the year figure that is then used to calculate the EPS.

    The interest, tax and NCI figures are all irrelevant and have been shown to try to confuse you.

    Give it a go and see how you get on.

    Thanks

  • Author
    Posts
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